(WCTW) General Musing - Sable Offshore, OPEC+, And M&A
This write-up won't be like the usual WCTW write-up. Instead, I thought it would be a good time to do a general musing article with these topics in mind:
Sable Offshore - My latest thoughts on it and my action plan.
The latest OPEC+ policy and what it means for the oil market going forward.
M&A in the energy patch and why the "haves" should continue to acquire.
Sable Offshore
Sable was written up by Jon Costello back on February 13. We've followed Sable closely thanks to my podcast interviews with Ben Kelleran of Kontrarian Korner.
Here's a stock illustrating the recent drama that has taken place:
When we first wrote up SOC in February, the company was projecting the following:
Pipeline repairs will be done by early May.
Hydrotesting will be complete by late May.
Fire marshal permit to restart the pipeline would be received before July.
Oil sales will start soon after.
Well, fast forwarding to today, 2 of the 4 items above have been completed. Now, if you corroborate the events the company projected with the stock chart, you can probably figure out that they were successful in achieving the first two tasks. No small feat considering that this is done in the state of California where oil and natural gas companies go to die.
But the recent success is running into some legal turmoil. In particular, the drama started last week when the California Coastal Commission (CCC) was successful in obtaining a temporary restraining order (TRO) on SOC. In particular, this TRO prevented SOC from conducting any further pipeline repairs. The company soon followed with an 8-K that detailed all of the hydrotest has been completed and no more repairs are needed.
The SOC bulls were also confident that the TRO issued last week wouldn't impact the fire marshal's approval of the pipeline restart. That is... until today of course.
Today, Judge Donna Geck ruled in favor of the environmental organizations, Environmental Defense Center and Center for Biological Diversity. The judge issued a TRO against Sable and the Office of the State Fire Marshal, halting any actions toward restarting the pipelines until a hearing scheduled for July 18.
Well, this is where the drama begins. I read everything from the bulls to the bears, and the conclusion I reached is that the bulls are going to win this one.